The confidence of American consumers decreased in January for the first time in six months due to concerns about unemployment and the impact of potential tariffs on inflation.

The final confidence index for January dropped to a three-month low of 71.1, down from the December reading of 74, according to the University of Michigan. The decline from the preliminary January figure of 73.2 included the lowest confidence level since August 2020 among voters described as Democrats.

Consumers expect prices to rise at an annual rate of 3.2% over the next five to ten years, up from the 3% forecast in December. According to data released on Friday, consumers anticipate costs will increase by 3.3% over the next year, the highest figure since May.

Many economists have warned that tariffs could drive up prices, which could affect both consumer confidence and demand when implemented. The Trump administration is confident that a decrease in energy prices will help mitigate any increase in price levels.

The survey also revealed that consumers indicated they were buying in advance to avoid future price increases.